After a wait of nearly 15 months, the Reserve Bank of India (RBI) has granted an in-principle approval to Prosus-backed fintech firm PayU to operate as a Payment Aggregator (PA) and resume onboarding new merchants.
In January last year, the RBI had returned PayU’s application for a PA license due to its complex corporate structure, directing the company to reapply.
During this period, PayU was forced to halt onboarding new merchants for its online payment aggregation business, similar to other fintech firms like Paytm, Razorpay, and Cashfree. While the latter two received approval in December last year, Paytm is still awaiting clearance.
“This validation by RBI fills us with joy as it paves the way for us to welcome new businesses onto our platform. This is also a testament to our relentless focus on compliance and corporate governance,” said Anirban Mukherjee, CEO of PayU.
He added, “This license is pivotal in our mission to establish a globally renowned digital payment infrastructure rooted in India. Aligned with the government’s Digital India initiative and the RBI’s forward-thinking regulations, we are dedicated to driving digitization and financial inclusion, particularly for small merchants.”
PayU, an IPO-bound fintech firm, has worked closely with the regulator over the past year on its reapplication for the license.
In FY23, PayU India reported a revenue of $400 million, marking a 31 percent growth from the previous fiscal. Although FY24 results are pending, revenue from its core payments business rose 15 percent to $211 million in the first half of the year. This growth primarily came from existing merchants and its omnichannel business, as new merchant onboarding remained paused.
Notably, Cred, a fintech firm backed by Kunal Shah, also received in-principle approval to be a PA, according to a source close to the development.
Being a PA allows companies to manage and move customers’ money to merchants. While this in-principle approval isn’t a final license, it permits the business to operate unless instructed otherwise by the RBI.